Industry Brief – Corporate Wellness Through the Lens of Productivity

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Marketing & Sales

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Corporate Wellness Through the Lens of Productivity

Corporate wellness as an industry is valued at over $50 billion, and it is poised to grow at a steady pace for the foreseeable future. Historically, data in this industry has come from insurance claims, as they have been the most measurable; however, increased health consciousness and recent discoveries on the effect that a healthy lifestyle has on workplace productivity have gained popularity.

While the ability to measure productivity is still considered new territory, it’s an area in which Archetype has spent a lot of time exploring. As interest in productivity heightens and distillation of data in this arena becomes less nebulous, we are leading this shift that will contribute to new industry growth and the reshaping of the modern economy’s workforce.

Self-Funded Insurance and the Rise of Corporate Wellness

The rise in demand for a healthier workforce coincided with the growth of self-funded insurance. In short, self-funded insurance is when a corporation serves as its employees’ insurer. Since health expenditures are far more predictable as a population increases in size, self-funded insurance plans are largely reserved for large corporations that employ at least 500 workers.

Smaller companies, on the other hand, are unable to diversify away the risk and turn to insurance companies to serve as a middle man. To pay for their workers‘ health expenses a company sets aside internal funds that are financed by both employees and the corporation itself. The corporation will draw from the fund as necessary to cover its employees’ claims, pocketing any remaining funds. The structure of self-funded insurance programs therefore creates an incentive for companies to minimize the value of their employees’ health insurance claims, ultimately leading to the rise of the corporate wellness industry.

Shifting Focus Toward Productivity

Corporate wellness companies focus on promoting healthier lifestyles among their clients’ workforces. This could be through any health promotion activity or policy designed to support healthy behavior and improve health outcomes. Workers’ increased health consequently leads to a reduction in health-related expenses, which ultimately increases the portion of the insurance fund retained by the company. Such programs have proven to be successful. Companies that have robust wellness programs benefit from a healthier workforce and a steady decline in overall claims.

However, new research has prompted the corporate wellness industry to pursue a new course.

While the effectiveness of corporate wellness programs’ ability to reduce healthcare costs has been proven, recent studies point to the conclusion that companies reap a much larger ROI through increased workforce productivity.

Productivity at a Glance

Absenteeism: the habit of frequently taking days off work

Presenteeism: the lack of focus and effectiveness while still present at work

A worker’s health has a significant impact on both absenteeism and presenteeism

Workplace productivity is driven by two primary factors, absenteeism and presenteeism. Absenteeism is the habit of frequently taking days off work, and presenteeism is the lack of focus and effectiveness while still present at work. Both factors are largely caused by the poor health of an employee. A worker suffering from a health-related issue is far more likely to take days off from work. Such an employee is also inclined to be preoccupied with their condition while at work, reducing their concentration and productivity.

An illustrative example of the disastrous effects that an unhealthy lifestyle can have on workplace productivity is an employee living with Type II Diabetes. Type II Diabetes is generally avoidable through diet and exercise. Those who have the condition suffer from increased feelings of hunger, tiredness, and a myriad of complications that are caused by high blood sugar. Employees that have Type II Diabetes have a greater likelihood to take days off due to health-related reasons and have a diminished ability to perform at peak capacity.

When a company subscribes to a wellness program it actively promotes healthier living among its workforce, thereby reducing the number of employees suffering from conditions such as Type II Diabetes that arise from poor lifestyle choices. The benefits are clear.

With fewer employees suffering from avoidable health issues, a company spends less on expenses arising from such issues.

A healthier workforce is also far more productive. They take fewer days off work and have higher levels of energy and engagement when they are at the office. A company with healthier workers can therefore accomplish more. They are more productive and more profitable.

Increased Relevance of Corporate Wellness

The value of human capital has greatly expanded over the last few decades. The output of a company is extremely dependent on the quality of the people who work there. Ensuring that your company’s workforce is performing at peak levels is therefore crucial to achieving success in today’s modern economy. While living a healthy lifestyle is only a portion of what makes for an effective employee, it is a factor that cannot be overlooked.

Side note: Archetype Solutions Group is a consulting firm with extensive experience in the middle-market corporate wellness sector. We have helped lead numerous companies to increase profits, reduce inefficiencies, and grow their businesses. Additionally, Archetype has a comprehensive network that spans the vertical.

Want to learn more about Archetype’s experience in the middle-market corporate wellness sector?